AT&T-Time Warner Trial: Turner CEO John Martin Takes the Stand

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CORRECTED UPDATE WASHINGTON — Turner Networks CEO John Martin took the stand as an adverse witness for the Justice Department in its antitrust case against AT&T-Time Warner, and was pressed to say that channels like TNT and TBS were among the highest rated cable network and that its sport programming was “premium” content.

Eric Welsh, counsel for the DOJ, ran through a litany of figures showing the value of the Turner networks, asking Martin if they were accurate. He largely agreed.

Welsh also cited an interview Martin gave in 2016 in which he described the types of sports rights that the Turner networks have picked up as “sports that matter.” Those include March Madness, the NBA All-Star game and Major League Baseball playoffs.

Welsh is trying to show that such programming is “must have” content for distributors, as the Justice Department claims that the merger will give AT&T-Time Warner such leverage that they will be able to demand onerous terms from rivals, ultimately driving up prices for consumers. Without the Turner networks, which also include CNN, Cartoon Network and Adult Swim, rival cable and satellite companies face the loss of subscribers.

Martin, who took the stand on Tuesday afternoon, will likely face about 90 minutes of more questions from the DOJ on Wednesday, followed by more friendly cross-examination from AT&T-Time Warner’s legal team. Craig Conrath, lead counsel for the DOJ, already has signaled that they will ask Martin about another comment he made — that Sling TV’s service would be “crap” if it didn’t carry the Turner networks.

Welsh also ran through figures showing substantial growth in Turner network affiliate revenue from 2013 to 2016, as well as advertising.

Sling TV, owned by Dish Network, opposes the merger. Its president, Warren Schlichting, appeared earlier in the day, and testified that the combined company would jeopardize Sling TV’s “skinny bundle,” in which it offers a limited number of channels at a $25 per-month starting price.

He said that AT&T-Time Warner would gain leverage that would force Sling TV to accept more than the four Turner networks it now takes, even though the additional networks do not draw a big audience.

That drew the interest of U.S. District Judge Richard Leon, who is presiding over the case. He seemed intrigued by the idea that distributors are carrying networks they do not want — long a contentious issue in carriage negotiations.

He asked Schlichting whether they could collect their own viewership data and use that in negotiations to show the distributors that the channels are fizzling.

“We do,” Schlichting said. “We say exactly that in negotiations.”

But he said that the data “has almost no bearing on the outcome. It is very rare that we are able to unplug any network.”

He said that the practice was “not logical,” given that so many of the networks “never should have been born in the first place.”

Leon asked whether the FCC was aware of the practice, and Schlichting said that the agency’s jurisdiction was over broadcast TV.

“It’s a leverage game,” Schlichting said.